Ponzi scheme hits home in Aspen
ASPEN, Colorado Investors far and wide still are trying to digest the news that they might be wiped out financially because of Bernard Madoffs alleged Ponzi scheme. And it appears that some of his alleged victims call the Aspen area home.Its not something most people contacted for this story want the public to know. But allegations are that Madoff feasted on the finances of wealthy Jewish investors, including a number of them in Aspen, which is home to three Jewish congregations.I did not invest in him, but I know at least 10 people [in Aspen] who did, said Aspen businessman Leonard Boogie Weinglass. But Im not giving their names.Another resident whos well connected to Aspens Jewish community would only speak on the condition of anonymity. He said the issue is highly sensitive and embarrassing for many.I can tell you dozens and dozens of people, he said. I would not be surprised if the impact is half a billion dollars.The FBI arrested Madoff on Dec. 11, on allegations that he duped investors out of up to $50 billion through his orchestration of a Ponzi scheme, a false investment device in which money from new investors is used to pay interest to existing investors. It is believed to be the biggest Ponzi scheme ever. Madoff, who lives in Manhattan and has yet to be charged, is currently free on $10 million bail.Meanwhile, others contacted for this story declined to comment or did not return telephone messages, but sources estimated that the number of Madoffs Aspen area investors approaches 50.There have been some [local victims], said Joshua Saslove, the owner of an Aspen real estate firm. But thats as much as I want to talk about it to the press. Saslove was speaking by cell phone from Palm Beach, Fla., home of the Palm Beach Country Club, whose members include a number of investors allegedly burned by Madoff.Im in the heart of it right here, Saslove said.Aspen resident Bob Morris is quite familiar with the Palm Beach Country Club. His grandfather was a charter member when it opened in the 1950s, mainly because other country clubs did now allow Jewish members. His late mother and father were also members, but they did not invest with Madoff, Morris said.People are losing all of their money and their jobs, Morris said. Its just tragic.In Aspen, at least two residents are said to be selling their homes because of the alleged scam.Saslove said its too early to say what, if any, impact Madoffs alleged Ponzi scheme will have on one of Aspens primary economic drivers, the real estate industry.It might, but I dont know that to be so, he said. Wally Obermeyer, president of Aspen-based Obermeyer Asset Management, said: If you have a loss of $30 billion to $50 billion, thats going to have an impact everywhere. This is horrible news, especially for those people who invested most of their money with him.Obermeyer said his firm did not invest with Madoff, although hes had clients who have called just to make sure their money was safe after the news broke.We as a firm had zero exposure, he said. But we know of people who had a great amount of exposure.Its a bitter and painful reminder of how important it is to do due diligence. If something seems too good to be true, it probably is.Obermeyer said he knew of Madoff before last weeks scandalous news broke. In general we do not like to trust black boxes, or hedge funds that arent transparent, he said. While the identity of many victims remains unknown, reports have surfaced that real estate and media mogul Mortimer Zuckerman is one of them. Last month and before Madoff was arrested Zuckerman, who owns the New York Daily News and the U.S. World & News Report, sold his Red Mountain home for $9 million.Earlier this week he told Business Week that he did not lose any personal assets in the alleged scam, but a charitable trust controlled by Zuckerman has been sucked dry. The trust funded such causes as education, cancer research and college debating, among others.I never knew Mr. Madoff, never heard of him, and then last Friday I get the notice that the entire fund has been lost because of Mr. Madoffs activities, he told Business Week. So, obviously, its going to affect the ability of this [charity] to do more things. Thirty million is a lot of money that I intended to spend for the welfare of email@example.com
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